Scenes at the Catalan independence referendum

Following the independence referendum, panic spread through Spain's premier stock index the IBEX 35, which plunged to its lowest level since March.

At the same time, the cost of Madrid's debts jumped with the spread between Spanish and German bonds reaching its widest level in around five months.

And experts said the Catalonia drama is looking likely to grow when the region declares independence.

David Madden, market analyst at CMC Markets UK, said: "Traders will be reluctant to buy into the IBEX 35 or Spanish stocks will this situation is still ongoing, and for now there isn’t an end game in sight.

"The head of the Catalan separatist movement has pledged to declare independence for the region within days.

"The Spanish King and Prime Minister oppose this, and the region has been threatened with direct rule.

"The eyes of the world are on Catalonia and the spike in political tensions is likely to keep investors away."